Sudan and South Sudan Reach Oil Agreement

For the first time in over a year oil will flow from Sudan after both Sudan and South Sudan have been a mess for many years. The two countries, once locked in a long and bitter civil war with crimes against humanity being committed on a wide-scale, split in 2011 after referendum by Southern Sudanese citizens motioned for independence. Unfortunately this split didn’t result in stability and peaceful relations as the two nations have been locked in disputes over oil revenues ever since.

While 75% of the oil in the two countries lies in South Sudan, the pipelines to the sea and the oil refineries themselves are all located in the North. This has turned the oil industry into a major source of contention for the two nations which are both struggling to heal from the years of bitter civil war.

Both states rely heavily on oil, with government revenues being propped up by the “easy” oil money. With their economies in shambles and poverty widespread both Sudan and South Sudan are in desperate need of oil money to fund social programs to increase stability and reduce suffering and to maintain the basic functioning of the two states.

In fact South Sudan relies on oil for a shocking 98% of its revenue. When the oil tap shut off the country nearly collapsed with its economy plummeting and major projects being put on hold. For a country still trying to recover from years of war the effects were devastating.

Meanwhile in Sudan the IMF estimates that the economy shrunk by a shocking 11% due to the lost oil revenues. Sudan is still owed compensation fees for the succession of South Sudan from the nation and also charges the South oil transit fees for using its pipelines.

It should be noted, however, that this is not the first time that oil appeared to be on the verge of flowing again. In September of 2012 both countries had seemed to have come to agreement but now months later arguing over terms continues.

Sudan and South Sudan account for 350,000 barrels of oil per day. While these numbers may not be huge on the global scale, for the local economy the revenue raised could prove vital. Oil money allows the governments to engage in national public work projects without having to worry about raising taxes.

Along with the resumption of oil production both countries have also agreed to withdraw their armies which had until recently been massing near the border. Further, the countries have agreed to set up a demilitarized zone in order to stave off any future tensions.

Sudan still remains a tragedy and with an estimated 1.5 million people having lost their lives in the civil war tensions are likely to remain high in the future. The original war was also largely about oil. Still with both nations having weathered serious protests in recent months there is hope that the two nations will set aside their differences in order to maintain stability.

Will the two nations be able to live peacefully from here on out or is there a serious risk for another outbreak of war and violence. While nothing is guaranteed their mutual dependence on one another gives hope to them being able to exist side by side. If not, another round of violence could soon be sweeping the two nations.